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Life insurers disregard code of practice

The Life Code Compliance Committee has said that life insurers appear not to be taking their obligations under the Life Insurance Code of Practice seriously.

The code came into effect in 2017, with the independent committee now publishing its second annual report on how life insurers are complying.

The committee did not hide its disappointment, not only with life insurers but with the quality of data.

"The committee's intention was to publish a report that would provide meaningful insights into how subscribers have improved their code compliance since the code came into formal operation in 2017," chair Anne Brown said

"Unfortunately, inconsistencies in the content and quality of last year's data and its collation has not enabled this to happen."

While smaller life companies that subscribe to the code managed to supply high quality data, the larger insurers left much to be desired.

"Larger subscribers need to improve their data quality assurance and reporting," the committee said.

"The under-reporting of breaches relating to claims decision timeframes indicates that subscribers lack sufficient processes for recording and reporting such breaches."

The committee's criticisms didn't stop there, with the report adding that the corporate culture of many subscribers appears not to be in alignment with the Code of Practice.

It also questioned how life insurance companies are training and monitoring staff, as a large volume of breaches of the code were caused by human error.

The code found an increase in claims related complaints and claims handling timeframes. There were 19,483 complaints reported to life companies that subscribe to the code. That number was 29% higher than last year.

On income claims, 17% took longer than the required two months. This was a worst result than last year when 11% took longer than two months.

"Self-regulation is a privilege," Brown said.

"With that privilege comes an obligation to ensure that appropriate mechanisms are in place to comply with the Code and report, via complete and accurate quantitative data, both internally and externally."

Read more: Life Code Compliance CommitteeLife Insurance Code of PracticeAnne Brown
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